Inherent in any transaction is risk. Before you buy a product you stand to lose time, money, patience, sanity (and more) if the product does not perform. The most common type of risk is a financial one. You risk your hard earned money to buy a product or service in the hopes that it will live up to its claims. Before any transaction happens one party must assume the risk.
If you want to make more sales – you, the seller, should bear most if not all or more of the risk. If you do this you reverse the risk – and it’s called risk reversal. Now why should you do that? By assuming most of the risk you show the buyer you are confident of your product claims. Believing in a product will boost sales, making a stonger proposition gets more sales - therefore, reverse the risk!
The most common form of risk reversal is known as the age old guarantee. By having very liberal guarantees you make your claims of why people should do business with you that much stronger.
There are 2 types of guarantees – conditional or unconditional. When doing normal money back guarantees make it unconditional. You do not want your clients to jump through thousands of hoops like Charlie the Circus clown. When buyers have to do many things just to get a guarantee they will experience frustration with your company. That’s a big no-no. Rather refund the money and move on.
However, when doing double your money back guarantees or something like that, you might want to make it conditional. Simply tell the buyer to show you 1 or 2 things that they have done with the product. By attaching a simple condition you halt any unjust refunds. How many types of refunds are there? Well besides the usual 100% money back guarantee, there is a double or even triple your money back. There’s also the 110% money back guarantee or the “I will refund every penny of your purchase plus you get to keep X and Y for your trouble” guarantee.
Which should you use?
Well, there is one guarantee that you should never use. Can you guess which one? It may sound strange but it is the 100% money back guarantee. Let’s look at why. If you take 30minutes to buy a product for say a R1000, do you get everything back when you’re R1000 is returned? The short answer is no. You do not get your 30 minutes back. This may seem trivial, but do not be mistaken ...
Time is you’re most prized and valued asset. If you have a job or render a service and earn R500 for 30minutes of work – you are out of your 500 bucks for your lost time. Thus it is very important to try and go beyond the typical 100% money back guarantee.
